Barriers to Entry and Regional Economic Growth in China

Kjetil Storesletten, Loren Brandt (loren.brandt@utoronto.ca) and Gueorgui Kambourov

No 14965, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Labor productivity in manufacturing differs starkly across regions in China. We document that productivity, wages, and start-up rates of non-state firms have nevertheless experienced rapid regional convergence after 1995. To analyze these patterns, we construct a Hopenhayn (1992) model that incorporates location-specific capital wedges, output wedges, and entry barriers. Using Chinese Industry Census data we estimate these wedges and examine their role in explaining differences in performance and growth across prefectures. Entry barriers explain most of the differences. We investigate the empirical covariates of these entry barriers and find that barriers are causally related to the size of the state sector.

Keywords: China; Growth; Transition; Convergence; Firm entry; Entry barriers; Capital distortions; Output distortions; Soe reform (search for similar items in EconPapers)
JEL-codes: D22 D24 E24 O11 O14 O16 O40 O53 P25 R13 (search for similar items in EconPapers)
Date: 2020-06
New Economics Papers: this item is included in nep-bec, nep-ent, nep-mac, nep-sbm and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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Related works:
Working Paper: Barriers to Entry and Regional Economic Growth in China (2020)
Working Paper: Barriers to Entry and Regional Economic Growth in China (2018)
Working Paper: Barriers to Entry and Regional Economic Growth in China (2018)
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